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- [00:00]
A
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- [00:41]
B
Studios Podcasts Radio News first of all, thanks so much for being with us. We appreciate your time. It's great to be on Obviously a big topic of discussion here right now is the war with Iran. Curious how it is affecting Constellation.
- [00:55]
C
You know, not much directly right now. You know, as a domestic electricity producer, natural gas pricing in the US Isn't really dramatically affected. We're already shipping every molecule we can of lng, so there's not going to be an uptick of natural gas leaving the country until new facilities are built. So the price of natural gas has been relatively stable. We don't use oil to make electricity except during the dead of winter, and we're already past that period of time. So we're seeing some stability in the long term. We're we're worried about what everybody else is worried about, supply chain issues, different things as we think about the implications to Asia, which will be of course more significant.
- [01:37]
B
So right now the long term is more of a bigger problem.
- [01:40]
C
Yeah, I think that's right. It's both a problem and an opportunity, I would say.
- [01:44]
B
How is it an opportunity?
- [01:45]
C
Well, look, I think, you know, before when we were thinking about the data economy, where the all the data centers are going to go, there was a pretty good debate that a lot of the data centers were going to go to the Middle East. We had already seen agreements to transfer chips to the Middle east for the construction of data centers there. Unless we end up with, you know, really a solid piece in the Middle east, which seems, you know, unlikely, at least based on the history we've all lived together, I think people are going to start to have second thoughts about citing major new infrastructure projects in the Middle East. I don't think Europe is in the game for these data centers. So that means more data centers in the US as the data economy builds out. As an electricity producer, that means more customers that we're going to deal with. I think the same is true for industrial customers that already were Moving from Europe to the United States. These pressures on international energy prices are all going to drive people to North America.
- [02:48]
B
And you just touched on this. But also nuclear power, extremely popular right now because of data centers and AI. So what are the different ways you can capitalize on that?
- [02:56]
C
Well, the first thing we got to do is lock down the existing fleet and make sure that we could operate it safely for as long as we can. That requires a good deal of investment. Having these agreements and having this social acceptance of nuclear and this kind of passion around nuclear means that we can make billions of dollars of investment to keep the fleet the way it is operating for a much longer period of time, also increasing the output of the fleet. We think we could get as much as six or seven brand new nuclear plants worth of energy just by upgrading the existing fleet. We're busy underway doing those things at Constellation. And then the last piece of it is actual new nuclear, whether that be small modular reactors or large machines. So, I mean, in all three areas, securing the existing fleet and the capital investments needed, increasing the output of those units and building new units alongside of those, we're very active.
- [03:52]
B
When you power data centers, you also have consumer bills. So how do you balance that need for data centers and its effect on pricing while keeping reliable and affordable power? You know, we hear a lot of people say, not in my backyard.
- [04:05]
C
Yeah, and look, I think this is involving conversation. I think the early days are data centers are takers and they're driving up the cost of energy. And that is driven by this peak demand, which is a handful of hours, call it 40 of the 8,000 hours we have in a year are constrained, and we're seeing higher prices in those hours as data center demand has come on. The President is addressing that through executive order and the data economy. Customers have agreed to be flexible at that peak or bring their own capacity resources at the peak. If we manage the peak, we want the data centers on the grid. Why is that? Because think about it. All the wires we've built all the way down your streets, all the big transmission lines you all see are dramatically underutilized with the exception of those 40 hours. If we could get more electricity running through those wires during these periods where the system isn't being utilized, that means we could collect rent or tolls on those lines through these customers, and we could actually reduce costs. Coming into this series session, very different than last year are big think tank reports that are saying, hey, if you do this right, data centers actually drive down the cost of electricity, not up.
- [05:26]
B
But if you do them right and data centers drive them down. What do you do in the meantime? Because it's not going to be immediate
- [05:32]
C
in the meantime you have to use other tools. So in the meantime, here's what we're thinking about. We've been working with some of our other industrial customers to voluntarily reduce demand during these peak hours. So we're able to curtail certain customers, have the data economy customers pay them to do that so that we get that same flexibility on peak. The next up in terms of available generation are the backup generators at the data centers. How do you use them more effectively as a grid resource? How do you use batteries as a resource? And then as you look at three or four years out, that's when you're thinking about new gas fired generation.
- [06:11]
B
There's a lot of concern about a possible crash or at least some type of correction in the air market. And data centers. What's Constellation read on this.
- [06:19]
C
You know what I think people think because we're there are major customers that we have some independent forecast. The reality is this. I am looking at what they are spending. They know their business, they know the demand. So as long as the capital expenditures on data centers is continuing to climb as it has, that is the best signpost for me to gauge the growth of my own business. We're not kind of separately going out there and evaluating AI and whether we have a bubble. What the data economy customers are telling us is that demand is increasing because they're building more and more.
- [06:55]
B
Speaking of growth, any specific M and A plans right now?
- [06:58]
C
Well, if there were, I wouldn't be able to tell you.
- [07:01]
B
All right, we appreciate your time. Thanks for being with us.
- [07:03]
C
All right, thank you.
- [07:04]
A
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- [07:31]
D
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